Farmhands (from left) Dave Dickson of Walden, Taylor Maida of Hardwick and Bridget McKee of Morrisville do some weeding at HIgh Mowing Organic Seeds in Wolcott on Thursday, August 8, 2013. / GLENN RUSSELL/FREE PRESS

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WOLCOTT — In 2005, the owners of High Mowing Organic Seeds in Wolcott faced a dilemma. They needed money from outside investors to grow, but they wanted to maintain complete control of their company. The solution that Tom Stearns and Meredith Martin Davis came up with was on the leading edge of a new investing movement called Slow Money.

In the world of Slow Money, investors are more focused on social and environmental concerns than they are on financial returns. Slow Money investors are patient, and would allow High Mowing to grow according to the principles of sustainability it was founded on.

Stearns and Davis didn’t believe they would find those patient investors among the ranks of venture capitalists, or even angel investors, so they looked elsewhere.

“While angel investors don’t have the same time horizon and return requirements as venture capitalists, they still have requirements,” Davis said. “As soon as you take on those investors you’re on a clear course to sell the business. Your options immediately become very limited in how you can maintain your long-term integrity as a business.”

Slow Money began with a 2009 book by the organization’s founder and chairman, Woody Tasch, titled “Nature of Slow Money: Investing As If Food, Farms and Fertility Mattered.”

Tasch explains that Slow Money’s initial focus is on the food industry and agriculture. The idea is to promote so-called “patient capital,” with investors who are more focused on ensuring the health of their local food systems than on getting a quick return on their investments.

Based in Boulder, Colo., Slow Money follows in the footsteps of the 1989 founding of Slow Food in Italy, formed to protest the opening of a McDonald’s in Rome by encouraging people to cook at home and take their time, according to Slow Food USA in Brooklyn, N.Y.

Tasch visited Slow Food’s international headquarters in Bra, Italy in 2000, and was inspired by the success of the movement. Slow Food Founder Carlos Petrini spoke at the Slow Money’s 4th annual national conference in Boulder, Colo., in April.

The Slow Movement now includes Slow Cities and Slow Travel among other attempts to slow things down, each run independently, said Beth Meredith of Create the Good Life!, a Petaluma, Calif. company that helps people organize their lives and businesses around Slow concepts.

“If you think of Slow the same way you think of Green you can use it to modify a lot of things,” Meredith said. “It’s an approach.”

Ahead of everybody

High Mowing Organic Seeds, and Vermont in general, Tasch says, were practicing the principles of Slow Money before the movement had a name.

“Vermont and Tom Stearns were so far ahead of everybody that in a way they didn’t really need me or my ideas to come around,” Tasch said.

At High Mowing, sales of organic seeds had grown from about $18,000 in 2001, when Stearns still ran the company at home, to $350,000 in 2005. Stearns was looking for space to leaseand had taken on Davis as a co-owner. Davis, a former business consultant, was bringing a new level of organization to High Mowing.

“My job became all the things that needed to happen to have the business grow,” Davis said.

One thing that needed to happen was the infusion of about $800,000 in capital to get on a serious growth trajectory. Attending a forum of angel investors in Vermont, Stearns and Davis quickly realized they were in the wrong place. Every other business presenting at the forum had a PowerPoint slide that was an exit strategy — the sale of the company resulting in big returns for all involved. High Mowing had no exit strategy because Stearns and Davis never wanted to sell.

“Tom and I left there thinking this is not the right path,” Davis said. “We don’t want that slide. We don’t want to do that.”

As an alternative, Davis and Stearns came up with a convertible debt offering, meaning investors would accrue interest at 6 percent over five years, then have the option of converting their investment into equity in the company, or be paid out over the next five years.

“The people who came on board wanted us to be in the position to pay them back,” Davis said. “They wanted High Mowing to achieve its goal of not having to sell. The equity was a fall-back plan. If we weren’t in a position to pay them back, they would get a piece of the business.”

As it turned out, High Mowing was in a position to pay back investors, with sales reaching $4.2 million in 2012. All of the investors agreed to be paid back, none converted their interest to equity. Some even asked that their money be reinvested, or agreed to be paid back in 10 years rather than five.

“What makes that slow money was there was no pressure to achieve a certain result in a certain time frame and have an exponential return,” Davis said. “There was no expectation from those folks to grow big fast, sell and make them a bunch of money.”

Instead, Davis said, the investors were willing to trust High Mowing to run the business in a way that was financially viable but kept the values of the company “front and center.” There are no shortcuts to growing organic seeds. The process is complicated and time-consuming with careful management of trial fields and isolated production and breeding fields.

Too small to matter?

Cairn Cross, co-founder of Fresh Tracks Capital, a venture capital firm in Shelburne that focuses primarily on Vermont companies, has his doubts about Slow Money. Cross and his partners manage a capital pool of about $25 million.

“Sometimes the problem with Slow Money is it’s so slow it never arrives,” Cross said. “There’s a lot of talk about Slow Money, but how many companies have been financed by it?”

Woody Tasch said that since mid-2010, more than $30 million of slow money has been invested in 221 small food enterprises around the country.

That’s a “miniscule amount” of the overall investment capital in the country, says Cross, who puts the annual amount of money invested by the venture capital industry and angel investors alone at $40 billion, about $20 billion each.

Cross also questions whether High Mowing Organic Seeds really needed Slow Money. He says Fresh Tracks has made investments that lasted for as long as nine years before selling out, adding that the firm considers itself to be patient.

“I suspect High Mowing Seeds could have raised money conventionally because I suspect their business model works well,” Cross said.

Meredith Davis agrees that her company’s business model is working well. High Mowing got a boost from the U.S. Department of Agriculture in 2002, Davis said, when the agency’s national organic standards were put in place. The standards required that farmers growing organic crops use organic seeds, and at the time very few companies were offering organic seeds.

By 2005, only about 5 percent of organic food was being grown from organic seed, Davis said. Today she estimates that percentage has grown to 10 to 15 percent of organic food grown, making the rule more “aspirational” than enforceable. But the USDA has still raised the profile of organic seeds.

“I think the education is a big thing,” Davis said. “People who farm organically are doing it because of their philosophy, but thinking about where their seed comes from is not something a lot of them do right off the bat, until you tell them what organic seed means, and give them the statistics of the chemicals that go on an acre of inorganic seed.”

Organic seed requires High Mowing to grow organic plants — self-evident, but still missed by 85 to 90 percent of organic farmers, according to information gathered by organic certifiers.

Taking data, selling seeds

High Mowing maintains an intensive breeding program, and then grows seed plants in isolated fields to prevent cross-contamination. Looking over High Mowing’s seven acres of trial fields on a warm summer afternoon, Davis said there were probably 1,000 different varieties of seeds represented in the neat rows of rich soil.

“What we’re doing in this field is taking data,” Davis said. “How does it perform, what is its yield, its disease resistance? We’re doing taste tests, selecting from what’s here what will go in the catalog next year.”

Once the field trials are over and the seed selections are made, the next step is to plan for production, allowing for the isolation required to ensure the purity of the seeds.

“When we do our production plan each year we map it out on fields and each of those are a half-mile apart,” Davis said.

High Mowing’s attention to detail in the production of seeds is done with one purpose in mind.

“The visual appeal and flavor helps set their food apart from the grocery store,” Davis said. “If this tomato is going to cost you more, you want it to taste and look better.”

A hot call

The late Rian Fried, who died in July, was a co-founder of Clean Yield in Norwich, an investment advisory firm founded in 1984 on many of the principles that would characterize the Slow Money movement. In May, just two months before he died, Fried wrote about High Mowing in the firm’s newsletter.

Fried writes about being at a Socially Responsible Investing conference in Albuquerque in October 2007 when he received a call from his office telling him that Tom Stearns had made a cold call, hoping to talk to Fried about investing in High Mowing.

“It was a call — to me ‘hot,’ not cold — that I had been waiting for,” Fried wrote. “It was also one that profoundly changed the kind of investments that Clean Yield makes to have a significant impact on the health of our local economy.”

Fried writes that he called Stearns back immediately and asked him to “hold a spot for us” in his investor lineup.

“He was taken aback; without any pitch from him, here was a financial institution wanting — not just willing to consider — an investment in his company,” Fried wrote.

While Fried had yet to meet Stearns, he knew of him, and he believed in what he and High Mowing Organic Seeds were doing. As Fried wrote in his newsletter, “He had come to the right compost pile.”

Meredith Davis said Fried’s enthusiasm gave High Mowing a boost in confidence in the runup to an investment offering that would eventually be oversubscribed, raising more than $1 million for the company.

“That was a huge game changer for us,” Davis said of Fried’s commitment, and the seven clients his investment firm brought to High Mowing as investors.

“I know that very directly in our own business and I’ve see it in many other cases,” Stearns said. “It’s life changing for both the businesses that receive the investments and honestly for the investors themselves, people getting a chance to put their money in a place where they believe in it.”